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Exhibit 10.126
TAKEOVER AGREEMENT
This TAKEOVER AGREEMENT (hereinafter, this "Agreement") is made and
entered into this 15th day of May, 2000, by and between BCC Development and
Management Co. (hereinafter, "Owner"), and St. Xxxx Fire and Marine Company and
its wholly owned subsidiary United States Fidelity & Guaranty Company
(hereinafter, collectively called "Surety").
RECITALS
A. On or about September 27, 1998, Owner entered into a Contract with
CCI Construction Company, Inc. (hereinafter, "Principal") for the construction
of an assisted living community known as Outlook Pointe at Westerville, located
in Westerville, Ohio (hereinafter, the "Project"). The construction contract
between Principal and Owner, together with all agreed upon Change Orders thereto
are collectively referred to as the "Contract."
B. On or about September 27, 1998, Surety executed a Performance Bond
for the Project in the penal sum of $5,589,900 (hereinafter, the "Performance
Bond Penal Sum"). On or about September 27, 1998, Surety executed a separate
Payment Bond for the Project in the penal sum of $5,589,900 (hereinafter, the
"Payment Bond Penal Sum"). The Performance Bond and the Payment Bond are
collectively referred to as the "Bonds."
C. On or about February 22, 2000, Principal voluntarily abandoned the
Project, admitting to Owner and Surety that it was in default under the Contract
and that it was financially incapable of completing its obligations under the
Contract. Shortly thereafter, and at the request of Surety, Owner acknowledged
that Principal was in default and that, in light of the default and abandonment
by Principal, Owner considered Principal as being terminated from the Project.
D. On or about March 10, 2000, Owner made a formal written demand upon
Surety to cure all defaults and satisfy all obligations of Principal under the
Contract pursuant to Surety's obligations under the Bonds.
E. As of the date of this Agreement, Principal and Owner have agreed
upon and finalized seven Change Orders for the Project, a listing of which is
attached hereto as Appendix A. Principal has submitted requests for additional
claims for extra work pursuant to which it may seek additional compensation
and/or time extensions.
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F. In order to provide for completion of the Project by Surety pursuant
to the Bonds, Surety and Owner wish to enter into this Agreement.
AGREEMENT
NOW THEREFORE, in consideration of Surety agreeing to complete the Work
required by the Contract and for other good and valuable consideration, the
receipt of which is hereby acknowledged, Surety and Owner hereby agree as
follows:
1. Surety's Agreement To Complete The Contract. Surety hereby agrees to
cause the performance of each and every one of the terms, covenants and
conditions of the Contract, including all modifications thereto, and agrees to
be bound by the Contract. Owner acknowledges that Surety, by its execution of
this Agreement, is acting in its capacity as the surety for the Principal in
making arrangements for the performance and completion of the Contract, and not
as a completing contractor, and that Surety is not assuming any obligation or
liabilities beyond those set forth in the Contract and/or Bonds.
2. Surety's Right To Use Materials. Insofar as Owner has any right,
title or interest therein, Owner agrees that Surety, or a Construction Manager
completing for it, will have a right to use, without charge, any of the
equipment, materials, and appurtenances furnished or supplied to Principal which
may be stored on or about the premises of the Project or on which it may have
been fabricated for use in connection with the Project, whether or not presently
stored at the Project site.
3. Current Status Of The Contract. Owner and Surety agree that as of
the date of this Agreement:
(a.) The Contract Sum or Guaranteed Maximum Price under the
Contract, including all approved Change Orders is
$5,781,540.11.
(b.) Pursuant to the Contract, Owner has paid Principal
amounts totaling $3,300,307.02.
(c.) The difference between the amount in subsection (a.) and
subsection (b.) shall be hereinafter referred to as the
"Contract Balance," which as of the date of this
Agreement is $2,481,233.09. The Contract Balance shall
be increased or decreased, as provided for under the
terms of the Contract, as a result of certain pending
Change Orders to the Contract submitted by the Principal
and/or the Owner, and as a result of any Change Orders
for extra work (work that is different from, in excess
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of, or beyond the scope of the work required by the
Contract) requested or required by Owner after the date
of the execution of this Agreement.
(d.) As of the date of the execution of this Agreement, Owner
represents and warrants that, according to the records
available to it, the Contract Balance as defined herein
is accurate. As of the date of the execution of this
Agreement, Surety also represents and warrants that the
Contract Balance as defined herein is accurate, and that
this representation is made based upon review of all
records and information available to Surety, including,
without limitation, all records of Principal for the
Project. The Parties reserve the right to verify the
accuracy of the Contract Balance. The sole remedy of the
Parties, should it later be determined that the Contract
Balance is inaccurate, is reformation of the Contract
Balance to the proper amount.
4. Owner Agreement To Pay Surety. Owner agrees to pay Surety the total
amount of the Contract Balance (as may be adjusted from time to time pursuant to
Change Order) less a fixed sum of $70,000 (hereinafter, the "Offset"). The
Contract Balance less the Offset is referred to herein as the "Takeover
Agreement Balance." The Owner shall make monthly progress payments to Surety
based upon amounts of work completed by Surety, as provided for in the Contract,
up to a not-to-exceed total equal to the Takeover Agreement Balance. Owner shall
not offset monthly progress payments for any consequential damages other than
for the Offset as provided herein, but shall be entitled to withhold payments as
provided for in the Contract for defective work, incomplete work, retention and
satisfaction of liens on the Project. Additionally, Owner shall be entitled to
withhold amounts for damages or costs incurred by Owner for any breach by Surety
of any covenant or condition set forth in this Agreement including, without
limitation, Additional Withholding (as provided for and defined below).
5. Acknowledgment Of Allfirst Bank Writs. Surety acknowledges that
Owner has been served with Writs of Execution and/or Attachment (the "Writs") by
Allfirst Bank which designate Owner as a garnishee to satisfy Principal's debt
to Allfirst Bank in the amount of $1,600,691.81. Notwithstanding the Writs,
Surety has demanded that Owner pay the Takeover Agreement Balance directly to
Surety as a condition to its performing under the Bonds. In lieu of initiating
an interpleader action and asking a court to adjudicate the respective rights of
Surety and Allfirst Bank to funds (if any) that may in the future become due and
payable under the terms of the Contract and/or the Bonds, Owner
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has agreed to pay money directly to Surety pursuant to the terms of this
Agreement; provided, however, that Owner's agreement to make such payments to
Surety is conditioned upon Surety's agreement to provide full indemnification
for all claims and damages as provided for in this Agreement.
6. Indemnification By Surety. The Surety shall defend, indemnify and
hold harmless Owner and its respective past, present and future administrators,
officers, directors, shareholders, employees, predecessors, successors,
representatives, agents, attorneys, advisers, assigns, transferees, parents,
subsidiaries, partners, members, managers, affiliates and legal representatives
(hereinafter, collectively, "Indemnitees"), from and against any and all claims,
liabilities, damages, losses, costs and expenses (including, without limitation,
attorney's fees), arising out of or related in any way to the Writs and/or
payments by Owner to Surety pursuant to the terms of this Agreement.
7. Conditions Of Indemnification. After receiving notice of any claim
for which Indemnification would be available under this Agreement ("Indemnified
Claim"), the Indemnitee shall, within a reasonable time period, give notice
thereof to Surety, provided that the giving of such notice shall not be a
condition of indemnification. After receipt of notice of an Indemnified Claim,
Surety agrees to bear all reasonable costs and expenses (including attorneys'
fees) incurred in connection with the investigation, negotiation, settlement or
defense of any Indemnified Claim, and further agrees to provide defense counsel
and directly pay all defense costs and damages as incurred. Surety shall have
the right to select counsel for defense of any Indemnified Claim, provided that
such counsel is reasonably acceptable to Owner. Surety further agrees to
indemnify the Indemnitees from and against any liability, damages, losses or
settlements which may be incurred as a result of an Indemnified Claim. The
Indemnitees agree to cooperate with Surety and provide Surety information
regarding the defense of any Indemnified Claims as reasonably required to keep
Surety apprised of the status of defense of such claims. The Indemnitees shall
at all times use reasonable diligence and prudence in the investigation,
settlement and defense of Indemnified Claims.
8. Completion Contractor. Owner acknowledges that Surety will engage
the services of Xxxx X. Xxxxx & Associates, Inc. (hereinafter, "Xxxxx") for the
performance for the work under the Contract. The Surety shall be represented at
the Project by Xxxxx. Xxxxx will represent the Surety in dealing with the Owner
on day-to-day construction issues with respect to the Project. The Surety hereby
designates Xxxxx to prepare and process monthly requisitions consistent with the
terms of the Contract and this
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Agreement. Payments from the Owner shall be made payable to the Surety at the
following address, unless and until the Owner is notified in writing of any
different addresses:
St. Xxxx Surety Claims
ATTN: Xxxxxxx X. Daily, MC41
X.X. Xxx 0000
Xxxxxxxxx, XX 00000-0000
Xxxxx shall have, on behalf of the Surety, the authority to negotiate Change
Orders for extra work requested or required by the Owner. The Surety, not Xxxxx,
must approve in writing all Change Orders regardless of the amount of such
Change Orders. Xxxxx has no authority to negotiate deductive Change Orders,
credits, backcharges or net deductions from the Contract or the Contract Balance
of any nature whatsoever without the Surety's prior written approval. Any
agreements with respect to the warranty work of the Principal or corrective work
as a result of latent defects in the work performed by Principal shall require
the written approval of the Surety.
9. Surety's Limit Of Liability Under The Performance Bond. Except as
provided for in Paragraphs 6, 7 and 14, the total liability of the Surety under
this Agreement and the Performance Bond for completion of the Work under the
Contract and payment of all damages incurred by Owner as a result of the
defaults of Principal, shall not exceed the sum of (i) all amounts paid to
Surety by Owner pursuant to the terms of this Agreement, plus (ii) the Penal Sum
of the Performance Bond. All amounts in excess of amounts paid directly to
Surety by Owner, properly and reasonably expended to complete the Work under the
Contract or compensate Owner for damages resulting from Principal's defaults,
shall be credited to Surety against the Penal Sum of the Performance Bond.
Nothing in this Agreement constitutes a waiver of such penal sum or an increase
in the liability of the Surety under the Performance Bond.
10. Notices Regarding Completion Of The Work. Owner agrees that it will
give Surety prompt notification of any problems, disputes, or claims that occur
in respect to the remaining work in the completion of the Contract.
11. Substantial Completion. Surety agrees to achieve Substantial
Completion of the Project within 120 days after execution of this Agreement.
12. Additional Withholding By BCC. In the event that Surety fails to
achieve Substantial Completion within 120 days after execution of this
Agreement, Owner shall be entitled to withhold additional amounts of the
Contract Balance equal to
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$1500 per day for every day that Surety is late in achieving Substantial
Completion (hereinafter "Additional Withholding"). This provision for Additional
Withholding is not intended as compensation for BCC's delay damages should
Surety fail to perform, but instead represents allowable withholding under this
Agreement whereby BCC shall act as a stakeholder of certain sums. As set forth
below, Owner expressly reserves its rights under the Contract, the Bonds and/or
this Agreement with respect to any and all damages.
13. Surety's Obligation To Satisfy All Liens. Surety hereby agrees to
satisfy or bond off all currently known liens on the Project (a listing of which
is attached hereto as Appendix B) within fourteen (14) days of the execution of
this Agreement. Surety further agrees to keep the Project totally free and clear
of all liens and encumbrances that have been or may be asserted by any
contractor, subcontractor, supplier, or worker. In order to achieve Substantial
Completion, the Project must be free and clear of all liens and encumbrances.
Surety shall be liable to Owner for all damages incurred by Owner as a result of
encumbrances or liens on the Project.
14. Surety's Limit Of Liability Under The Payment Bond. Except as
provided for in Paragraphs 7, 6, and 9, the total liability of Surety under this
Agreement and the Payment Bond, for payment of subcontractors and suppliers of
Principal and for satisfaction of labor and materialmen liens and payment of
other damages incurred by BCC as a result of non-payment of subcontractors and
suppliers, shall not exceed the Payment Bond Penal Sum. All amounts properly and
reasonably expended by Surety in order to satisfy payment obligations to
contractors, subcontractors, suppliers, etc. and otherwise fulfill its
obligations under the Payment Bond and Paragraph 13 of this Agreement, shall be
credited to Surety against the Penal Sum of the Payment Bond. Nothing in this
Agreement constitutes a waiver of such Penal Sum or an increase in the liability
of Surety under the Payment Bond.
15. Surety's Warranty Obligations. Surety shall be obligated to perform
or cause to be performed all warranty work required under the terms of the
Contract, whether such work is required before or after achievement of Final
Completion. All such warranty obligations shall be coextensive with the warranty
obligations under the Contract.
16. Effective Date: This Agreement is effective as of the date first
written above.
17. Binding On Successors. This Agreement shall inure to the benefit of
and be binding upon the parties hereto, their
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successors and assigns. Owner and Surety do not intend by any provision of this
Agreement to create any rights in or increase the rights of any third-party
beneficiaries, nor to confer any benefits up or enforceable rights under this
Agreement or otherwise upon anyone other than Owner and Surety. Specifically,
Owner and Surety acknowledge that nothing in this Agreement shall extend or
increase the rights of any third-party claimants or the liabilities or
obligations of Surety under the Bonds.
18. Modifications. This Agreement may not be amended or altered in any
way except in writing executed by both the parties hereto.
19. Governing Law. This Agreement shall be governed and controlled by
the laws of the State of Ohio.
20. Entire Agreement. This Agreement, together with the Contract and
the Bonds, constitute the whole of the understanding, discussions and agreements
by and between Owner and Surety. The terms and provisions of this Agreement are
contractual and not mere recitals. Owner and Surety acknowledge that there have
been no oral, written or other agreements of any kind as a condition precedent
to or to induce the execution and delivery of this Agreement Any written or oral
discussion conducted prior to the effective date of this Agreement shall not in
any way vary or alter the terms of this Agreement.
21. Notices. Any notices which are required to be given by the terms of
this Agreement, the Contract or the Bonds shall be made in writing as follows:
As to Owner:
Xxxxx X. Xxxxxx, Esquire
Balanced Care Corporation
0000 Xxxxx Xxxxx
Xxxxxxxxxxxxx, XX 00000
and
Xxxxxx X. Xxxxxx, Esquire
Xxxxxxxxxxx & Xxxxxxxx LLP
Xxxxx X. Xxxxxx Building
000 Xxxxxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000 - 2312
As to Surety:
St. Xxxx Surety Claims
Xxxxxxx X. Daily, MC41
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X.X. Xxx 0000
Xxxxxxxxx, XX 00000 - 1138
22. Interpretation. It is understood and agreed by Owner and Surety
that this Agreement shall be construed without regard to any presumption or
other rule requiring construction against the party causing this Agreement to be
drafted.
23. Surety's Reservation Of Rights. Surety expressly reserves all
rights, claims or causes of action that it may have against Principal and/or
Owner under the Contract, this Agreement and/or the Bonds to seek recovery of
any damages incurred by Surety as a result of defaults or breaches by Principal
and/or Owner under the Contract and/or this Agreement. Surety also expressly
reserves all prior rights, equitable liens and rights to subrogation that would
be the Principal's, the laborers' or materialmen's or the Contractor's under the
Contract or at law or equity, as well as its own rights dating back to the
execution of the Bonds, including but not limited to those rights and remedies
that may accrue during the completion of the Contract. No waiver of such rights
is agreed to or implied or intended regardless of any provisions of this
Takeover Agreement to the contrary.
24. Owner's Reservation Of Rights. Owner expressly reserves all rights,
claims and causes of action that it may have against Principal and/or Surety
under the Contract, this Agreement and/or the Bonds to seek recovery of any and
all damages incurred by Owner as a result of defaults under and/or breaches of
the Contract, this Agreement and/or the Bonds. The rights, claims and causes of
action reserved by Owner shall include, without limitation, claims for all
damages incurred by Owner as a result of Principal's and/or Surety's defaults.
Notwithstanding any language in the Contract to the contrary, the making of
payments to Surety as provided for herein shall not constitute a waiver of any
rights or claims for damages resulting from breaches of the Contract. By paying
the Takeover Agreement Balance to Surety, Owner is merely (i) acknowledging
completion of the construction work as required by the Contract (to the extent
of the payments) and (ii) allowing Surety to act as the stakeholder of disputed
amounts under the Contract. Surety hereby acknowledges that BCC has reserved its
rights with respect to damages incurred as a result of defaults of Principal and
that BCC has the right to and may assert claims against Surety and/or Principal
to recover all such damages.
25. Contract Unaffected. All terms and condition of the Contract shall
be and remain the same.
26. No Third Party Rights. Other than as set forth below in this
paragraph, the parties hereto do not intend by any
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provision of this Agreement to create any third-party beneficiaries nor to
confer any benefit upon or enforceable rights or otherwise upon anyone other
than the parties hereto. The parties do acknowledge and agree that HCN BCC
Holdings, Inc. may select to have the Owner's benefits and rights under this
Takeover Agreement in the manner set forth in the Collateral Assignment of
Takeover Agreement attached hereto as Appendix C.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement on the date first written above, and each of the undersigned
personally represent and warrant that they have the full right, power and
authority to execute this Agreement on behalf of the respective parties.
Owner
By: /s/ Xxxxx X. Xxxxxx
Name: Xxxxx X. Xxxxxx
Title: V.P. and Secretary
Surety
By: /s/ Xxxxxxx X. Daily
Name: Xxxxxxx X. Daily
Title: Surety Claims Manager
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